Vodacom primed for acquisition

Vodafone is packaging Vodacom as a leading African mobile communication company in preparation for acquisition.

For its first fifteen years of operations, Vodacom was restricted from competing with Vodafone in Africa, north of the equator.

Vodacom, therefore, focused its attention on South Africa with significantly smaller operations in Lesotho, Tanzania, the DRC, and Mozambique.

After Vodafone acquired a majority stake in Vodacom and listed the company on the JSE in 2009, things changed.

Vodafone has agreed to use Vodacom as its exclusive investment vehicle in sub-Saharan Africa from the effective date of the listing.

For many years, not much has happened in terms of large investments and expansions into Africa. However, in recent years, Vodafone started to move its African operations to Vodacom.

In 2017, Vodacom acquired 87.5% of Vodafone Kenya from Vodafone International, which translated into a 34.94% indirect stake in Safaricom.

In 2020, Vodafone handed over management of its Ghana unit to Vodacom in another step to bring its African operations under one roof.

At the end of 2022, Vodacom purchased a 55% stake in Vodafone Egypt in a deal valued at R48.1 billion.

Vodacom is also part of a global consortium behind Safaricom Ethiopia, which recently launched its mobile network in the country.

Vodafone has, therefore, moved all its African operations to Vodacom, which is now primed for acquisition.

The main reason is that it is easier for Vodafone to offload its African operations as a single entity – Vodacom – than to sell these operations individually.

In December last year, Bloomberg reported that Emirates Telecommunications Group (Etisalat) is exploring a potential investment in Vodacom.

Etisalat is headquartered in Abu Dhabi, United Arab Emirates, with operations in 16 countries across Asia, the Middle East, and Africa.

According to the report, Etisalat wants to increase its international footprint, which makes Vodacom a logical target.

Etisalat is reportedly looking at the feasibility of buying all or only a part of Vodafone’s majority stake in Vodacom.

Combining some of Etisalat’s African operations with Vodacom to create a continental telecommunications giant is also being considered.

When Vodafone was previously asked about its plans, a company spokesperson said it is not looking to offload its African operations.

However, this feedback can be expected as corporates are seldom honest about sensitive issues like acquisitions.